Font Size: a A A

A Study On Feasibility Of Preferred Share Application In Private Equity Investment

Posted on:2017-03-12Degree:MasterType:Thesis
Country:ChinaCandidate:P S QiFull Text:PDF
GTID:2296330503959175Subject:Economic law
Abstract/Summary:PDF Full Text Request
Private equity investment originated from the United States in the 1940 s, which is a common financing method. And the preferred share is always the best choice to guard the risks of private equity investment in overseas market. Since being introduced, private equity investment quickly becomes an important part of capital market in China depending on its flexible and efficient method in connection with capital. However, the priority terms in investment agreement of private equity investment has not been deemed as valid terms yet because of the lack of legislation related to preferred share. Meanwhile, private equity investment, which applies preferred share, is vulnerable with respect to common share holder for its control of the object company being weakened.In this paper, through analysis of private equity investment’s risks in China, distinguishing the risks among so much risks of private equity investment that can be guarded after preferred share being applied. Then discussing the development of preferred share in China in accordance with the specific features of preferred share’s legislation and practice in China. The analysis of feasibility of guarding private equity investment’s risk by applying preferred share is based on two aspects, one is theoretical significance and the other is practice. At the same time, there are insufficient and defects in application for the insufficient and defects of legislation and practice. Respect to the insufficient and defects, this paper make suggestions on optimization for the application from three levels: legislation, specific protection and supporting measures in the basis of two principles: inclined protection and comprehensive assessment.This paper is divided into five parts, the structure and content of each part are as follows:Chapter one: risks and precaution of private equity investment in China. This chapter analyses the risks of private equity investment from the definition of private equity investment in accordance with the consecution of classification, nature and core value and distinguishes the risks among many risks that can be guarded by applying preferred share in the basis of the features of private equity investment in China.Chapter two: nature and features of preferred share in China. This chapter discusses the rights of preferred share holder from two aspects: vertical features and horizontal nature in the basis of analysis of preferred share’s definition, classification and nature.Chapter three: analysis of effect of preferred share’s application in private equity investment. This chapter analyses from two levels: theoretical significance and practice in accordance with the risks of private equity investment and features of preferred share. The theoretical significance includes reducing investment cost, coordinating the conflicts of interest and mitigating the risk of asymmetric information. The practice includes four cases of preferred share’s application in private equity investment in China.Chapter four: risks of preferred share’s application in private equity investment. This chapter divides the application risks into two aspects: legal risks of investment agreement’s priority terms and legislation risk of preferred share. Discussing the legal risks of investment agreement’s priority terms from dividends preference, liquidation preference and pre-emption right. Analyzing the legislation risk of preferred share in China in the basis of comparison between the current development in China and the experience overseas.Chapter five: optimization of preferred share’s application in private equity investment in China. This chapter makes optimization suggestions in accordance with two principles from three aspects: filling lack of legislation, enhancing the protection of preferred share holder and improving the performance of supporting measures.
Keywords/Search Tags:Preferred Share, Private equity Investment, Risk Prevention, Protection of Rights
PDF Full Text Request
Related items